On Wednesday, November 9th, the National Association of REALTORS® (NAR) hosted the REALTOR® Party Post-Election Live Webcast. During the webcast, NAR Senior Vice President & Chief Lobbyist Jerry Giovaniello, and NAR Political Consultant Doug Sosnik, explained the impact of the election results at the federal, state and local levels. I’ve condensed down the key points and added information for Arizona specifically, so that you can be fully informed of how the election impacts your business!
Note: The following article includes opinions, predictions, and explanations; all of which were provided by Giovaniello and Sosnik. Scroll down to view the full webcast. And remember – I’m just the messenger 🙂
- The REALTOR® Party won 90% of the elections it supported.
- NAR will continue to increase its focus on grassroots efforts and local elections.
- Expect a “deregulatory atmosphere” and changes to Dodd-Frank and the tax code.
- Dodd-Frank, changes to the Tax Code, and Flood Insurance are the 3 biggest issues on NAR’s radar after this election.
WHAT WAS DISCUSSED:
This election, California saw items on the ballot to address residential rent prices. These are often referred to as “rent control” ballot initiatives, and also usually include language to address what constitutes lawful evictions.
Doug Sosnik suggested that we can expect to see more of these types of initiatives across the country in the coming years. In particular, Sosnik said the states most likely to see these types of reforms are those with rising rent prices where Democrats hold a majority in the state legislature.
Transfer Tax & Sales Tax on Commission
One NAR success story from this election was in Missouri, where NAR helped in the initiative to pass an amendment to the Missouri State Consitution that would ban sales tax on services. Sales Tax on Services is a legislation that would directly impact REALTORS® – its effect is imposing a sales tax (in addition to income tax) on service-oriented businesses. That would include a sales tax on commissions earned by real estate agents. NAR takes a stance of opposition to these types of tax laws.
Essentially, this measure put Missouri REALTORS® on offense instead of defense. Instead of having to fight legislation year after year (Missouri saw “sales tax on services” legislation no less than 12 times in the past 7 years), this amendment blocks any new service sales tax.
In addition, a few years ago, Missouri was successful in using a similar campaign to block the addition of any new transfer tax on the sale of real estate. Transfer taxes are also heavily fought against by NAR and local associations, as they would impose anywhere from a 1% to 12% tax on homeowners when they sell their property.
Arizona was successful in passing a similar Constitutional Amendment back in 2008, which blocks any new transfer tax on real estate in the state of Arizona (yay!). We do not have a constitutional amendment blocking the sales tax on services, however, and this comes up periodically in the Arizona State Legislature. The Arizona Association of REALTORS® (AAR) continues to monitor this.
Both Giovaniello and Sosnik mentioned that local and state governments may be looking for new revenue sources in the coming years, and they may look to real estate to help balance the budget. REALTORS® should continue to be “on watch” for any changes in your towns, cities, and states.
Dodd-Frank & CFPB
Across the board, both Giovaniello and Sosnik agreed we can anticipate a deregulatory atmosphere under President-Elect Trump. While there are no detailed plans as of yet, REALTORS® should anticipate changes in the financial sector, including Dodd-Frank and CFPB. In regards to Dodd-Frank specifically, Giovaniello explained that it is “probably time” for a close review of these rules anyway.
Giovaniello also mentioned that half of all mortgage lending in the US is from non-bank lenders, and that some regulations may change in this area as well.
Taxes, Mortgage Insurance Deduction (MID), and 1031 Exchange
Experts say to expect changes in the tax code under President-Elect Trump, which could impact 1031 Exchanges and the MID.
The 1031 Exchange program is “in trouble”, according to NAR Chief Lobbyist Jerry Giovaniello (NAR has been talking about 1031 for some time now, so I’m not sure if the election results changed anything or if it has been “in trouble” for awhile). The 1031 Exchange is a deferred tax incentive, and both parties on the Federal level have proposed to limit these types of tax incentives.
NAR will continue to fight to protect the 1031 Exchange and the MID, two very important issues for our real estate market.
Giovaniello and Sosnik discussed flood insurance (“another battle we need to figure out”) and the Clean Water & Clean Power Acts. NAR will continue to be involved in these discussions. In addition, it was reiterated often that this election proves grassroots efforts by NAR members and fighting at the local level is continuing to be more and more important in our current political atmosphere.
To learn more about what the National Association of REALTORS® supports and opposes, and how the REALTOR® Party works, visit RealtorActionCenter.com.
VIEW THE FULL VIDEO BELOW: